Bogus Tax Shelters, Tax Fraud, and Tax Evasion Are Targeted by IRS and Justice Department

Bogus tax shelters and other tax fraud and evasion are among the common reports by tax whistleblowers to whistleblower attorneys. Today, the government launched a new, coordinated federal effort by the IRS, the Justice Department’s Tax Division, and U.S. Attorneys to stop fraudulent tax claims, frivolous tax returns, and bogus tax schemes.

Quoting former Supreme Court Justice Oliver Wendell Holmes’ famous observation that “[t]axes are what we pay for a civilized society,” Nathan J. Hochman, the Tax Division’s Assistant Attorney General, announced the “National Tax Defier Initiative,” or “TAXDEF.” Its purpose is to “investigate, pursue and, where appropriate, prosecute those who take concrete action to defy and deny the fundamental validity of the tax laws.”

According to the Tax Division, this TAXDEF initiative will:

–“Strengthen and expand coordination” among the Tax Division, the IRS, and U.S. Attorneys’ offices “to ensure that both criminal and civil enforcement tools are fully considered and utilized.”

–“Leverage expertise and resources” so that agents and attorneys across the country may “efficiently detect, investigate and where appropriate, prosecute tax defiers,” from a national perspective.

–Expand the government’s use of injunctions to stop “tax defier activity. Since 2001 the Tax Division has obtained over 300 civil injunctions against tax promoters and preparers, over a third of which directly involved tax defier activity.” The government views injunctions as a “powerful method of stopping the promotion of tax defier activity at the earliest possible moment,” and estimates its collections at more than $600 million from these efforts.

–Maximize the government’s use of technology to “detect, develop and prosecute cases.” According to the Tax Division, the Internet in the last decade has “greatly facilitated tax defier activity and turned what was once a paper–based local or regional enterprise into a click and download national operation.”

–“Alert and educate the public to the falsity of tax defier claims and publicize the consequences of tax defier conduct.” The government says it wants “to pull back the curtain and show the public that the promoters of these schemes are not wizards imparting the secrets of a ‘tax-free universe’ but are nothing more than garden variety hucksters and modern day snake oil salesmen peddling tax evasion schemes.”

Our whistleblower lawyer blog agrees with the government’s theme today that tax cheats place a greater burden on the vast majority of honest Americans who pay their taxes. For this reason, those who expose tax cheating should be thanked for their efforts.

The government’s announcement is at https://www.usdoj.gov/opa/pr/2008/April/08_tax_275.html.